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Motor Vehicle Tax Reform
2012 House Bill 386
Title Ad Valorem Tax (TAVT)
Darla Eden, CPA
Hall County Tax Commissioner’s Office
House Bill 386
Tax Reform Legislation
Title Ad Valorem Tax (TAVT)
is one part of a larger initiative to
spur economic growth
Title Ad Valorem Tax (TAVT)
• Titled vehicles which are self-propelled, will
be subject to a one time 6.5% TAVT due at
the time of title and registration.
• Includes cars, trucks, vans, SUVs,
motorhomes, motorcycles, straight-trucks,
truck-tractors.
• ALL changes in ownership on or after March
1, 2013 trigger payment of TAVT
What happens March 1, 2013 ?
• Titled motor vehicles purchased on or after
March 1, 2013
– Exempt from sales and use tax
– Exempt from annual ad valorem tax
(birthday tax)
What happens March 1, 2013 ?
– Titled as required in Title 40
• Subject to traditional title & registration fees in Title 40
– $18 title fee
– $20 registration fee
– Subject to TAVT
• Alternative ad valorem tax in the form of a state and
local title fee
Title Ad Valorem Tax Rates
• 2013 TAVT Rate 6.5%
• 2014 TAVT Rate 6.75%
• 2015 TAVT Rate 7.0%
Every three years starting in 2015 the state
revenue commissioner will analyze revenue being
generated by TAVT
Dealer/Business Purchase
• After March 1, 2013, new or used vehicles
purchased from a dealership or business will
no longer be subject to 7% sales and use tax
nor “birthday” ad valorem tax.
• Subject to TAVT
Dealer/Business Purchase Example
Current – Ad Valorem
$35,000 sale price
- $15,000 trade-in allowance
$20,000 taxable value
• 7% Sales Tax = $1,400
• Ad Valorem based on 26.59 mills
$372 ($35,000 x 40% x 26.59)
• Year One Taxpayer Pays: $1,772
Dealer/Business Purchase Example
New - TAVT
$35,000 sale price
- $15,000 trade-in allowance
$20,000 taxable value
•
TAVT = $1,300
(6.5% TAVT x 20,000)
Result: $472 savings in year 1 plus annual ad
valorem tax in future years
Non Dealer/Private Purchase
• Currently vehicles transferred between
individuals are not subject to sales and use tax.
• Under TAVT, ALL changes in title ownership
trigger the 6.5% TAVT which is collected at
time of initial registration. The “birthday” ad
valorem tax goes away.
Non Dealer/Private Purchase
Example
Current – Ad Valorem
$35,000 value
$372 annual ad valorem tax
($35,000 x 40% x 26.59 mills)
New – TAVT
$35,000 value
$2,275 TAVT
(6.5% TAVT x 35,000)
Result: $1,903 additional cost to the taxpayer
Non Dealer/Private Purchase
Example
$18 Title Fee + $20 Registration = $38
$2,500 x 6.5%
= $162 TAVT
$7,000 x 6.5%
= $455 TAVT
$15,000 x 6.5% = $975 TAVT
$20,000 x 6.5% = $1,300 TAVT
Opt-In Provisions
• Vehicles purchased in Georgia between
January 1, 2012 and February 28, 2013
may Opt-In to TAVT prior to December
31, 2013.
Opt-In Provisions
Compare:
(1) Actual sales tax paid plus prior year ad
valorem
(2) TAVT that would be due
If (1) is greater than (2) no additional
amount is due
If (2) is greater than (1) the owner may
remit difference and Opt-In
Family Transfers/Inheritance
Applies to spouse, parent, child, sibling,
grandparent, grandchild or stepchildren.
Affidavit to certify family member
• For vehicles owned prior to March 1, 2013
– Vehicles may remain in “birthday” ad valorem
system
OR
– Opt-in to TAVT by paying full TAVT
• For vehicles purchased after March 1, 2013
.5% TAVT applies
Leased Vehicles
• Full 6.5% TAVT applies to full Fair Market
Value (FMV)
• 7% sales tax remains on monthly lease
payment
Veterans
• Certain veterans who are exempt from motor
vehicle ad valorem tax will also be exempt
from TAVT
New Residents to Georgia
• New residents to Georgia are subject to pay
TAVT.
Example: A family that has 4 cars that are worth
$55,800 will owe $3,779
• 50% must be paid at time of initial
registration
• 50% remainder may be paid within 12
month period
New Residents to Georgia
Example
2011
2006
2004
2003
Ford Explorer ($26,875)
Ford F250 ($12,575)
Honda Accord ($7,850)
Toyota Tundra ($8,500)
$18
$18
$18
$18
$72
+
+
+
+
+
$20
$20
$20
$20
$80
+
+
+
+
+
$1,747
$817
$510
$553
$3,627
All ad valorem tax is paid up front-no “birthday”
tax will come due.
Vehicles Purchased From Out
of State Dealers
• Currently Georgia has a reciprocity agreement
with other states for state sales tax paid in
their state.
• Any sales tax paid would be credited to the
amount of sales tax due in Georgia.
Vehicles Purchased From Out
of State Dealers
• TAVT is not sales tax; therefore, if a vehicle is
purchased from an out of state dealer, any
sales tax paid will NOT be credited toward
the 6.5% TAVT.
TAVT Online Calculator
www.hallcounty.org
What are we doing to Prepare ?
• Press releases to radio and local papers
• Update hallcounty.org website
– Launched web calculator for estimating
TAVT
– Publish Q&A
– Publish Overview of Bill 386
• Radio Spots/Interviews
• Attending schools by the GA DOR
• In House training of personnel